Improving Loan Quality With Appraisal Management Technology


Significant quality improvement in administrative functions requires ‘jumps’ in the administrative competence of people, the rules for performance of their functions and the tools for facilitating those functions. In the mortgage industry, just such a jump in technology has recently occurred with the addition of comprehensive appraisal management software.

Changes in the mortgage regulatory environment, specifically related to appraisals, have created a new burden on lenders. This burden is not temporary, and regulated appraisal management is here to stay. Companies will continue to need, and will have to implement, compliant appraisal management solutions to minimize risk, while simplifying business processes, reducing operational expenses and improving customer service levels.
One of the primary hurdles related to the management of the appraisal process is the communication among the various parties involved. In the past, appraisal-related communication was largely handled via a combination of traditional email and/or phone conversations.

With email communications, the ability to retrieve and catalogue messages is limited by the capabilities of the email software and each individual user. Variation of results based on users is common. With phone conversations, both the content of the message and the time/date information must be transferred to some other system for documentation. Whether this means the sending of a confirmation email or the notation of a paper or digital file, this approach dramatically increases the possibility of error and the likelihood of failure to follow through with the prescribed process.

A comprehensive, Web-based appraisal management system alleviates these issues by requiring all communication relative to the valuation of any property be done within the system. An internal instant message system allows communication among the parties and date/time stamps all messages. Each message also has a notes feature that can be used to document any phone conversations.
There is a significant volume of information involved in the appraisal process that must be stored and retrieved throughout the origination process. It may also be necessary to access this data even after the process is complete for audit and other compliance purposes.

No longer is it an acceptable situation to take days or even hours to compile data that is subject to audit, compliance review or internal management review. In the past, such requests took many hours to compile and involved retrieval from a variety of disparate storage systems. Human error was a constant issue, and consistency in the data provided proved to be quite elusive.

Software as a service appraisal management systems enable a firm to store all relevant data – contact information, credentials, pricing information, forms, documents, notes, etc. – in a single location that is searchable and retrievable by authorized parties at any time from anywhere. Due to the flexibility of such systems, firms can develop customized approaches and assign access authorizations that are specific to their process.

Efficiency improvement in an administrative process requires the elimination of ‘time gaps’ between the various steps of the process. One of the great inefficiencies in the appraisal management process has been the time lost while waiting for notification from another party regarding the completion of a prerequisite step. These little time gaps add up and have resulted in a much longer and more frustrating process than is necessary.

Through an integrated ‘appraisal dashboard’ within the appraisal management system, these time gaps can be greatly diminished. Real-time status is displayed for each file, and it is automatically updated as parties complete tasks. Moreover, each status change is instantly communicated to selected parties.
One additional quality-enhancing benefit of appraisal management software is an improvement in the relationships of the parties involved. By delivering improved efficiency, simplified processes and automatic accountability for actions, the people involved in the process are free to focus on the professional execution of their work.

We are all aware that personality conflicts and frustration tend to arise in complicated processes without efficiency or built-in accountability. Reducing friction in the process reduces friction among the people involved.

By improving communication, information storage and retrieval, implementation of process controls and the relationships among the parties, new appraisal management software can alter the status quo relative to the mortgage origination process. This, in turn, creates jumps in quality, efficiency, transparency and compliance. The results of higher quality appraisal management are higher quality loans, more complete loan packages and better performing securities.

Clint Cornett is the founder and CEO of ValuTrac Software Inc., based in Flower Mound, Texas. He can be reached at

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